Here are five things you must know for Monday, July 11:
1. -- Stock Futures Edge Lower, Dollar Leaps
U.S. equity moved lower Monday, while the dollar scaled fresh two-decades highs against its global peers, as investors took a broadly defensive tone heading into what could be a crucial week in terms of direction for global stocks markets.
Earnings, inflation and retail sales data will likely establish a longer-term tenor for U.S. markets this week as investors debate underlying strength of the world's largest economy, which appears to be tilting towards recession, and the Federal Reserve's appetite for higher interest rates against surging inflation.
Last week's stronger-than-expected June jobs report, which showed 372,000 new additions alongside moderating wage growth, went a long way in terms of dispelling concerns over a near-term recession, but growth metrics continue to suggest contraction over the second quarter and sustained weakness as we enter the third
Modest gains for equities last week, however, indicate investors need further convincing before they're prepared to embrace a growth-lead rally for stocks over the second half of the year, particularly given the pace of inflation and the Fed's continued pledge on interest rates derived from minutes of is June meeting, which were published last week.
The CME Group's FedWatch tool is pricing in a 93% chance of a 75 basis point rate hike from the Fed later this month, with a 30% chance of a similar move in September, up from just 14% a week ago.
The U.S. Treasury bond yield curve remains firmly inverted, as well, with 2-year notes trading at 3.088% and 10-year note holding at 3.071% ahead of a $33 billion auction of new paper later this week.
The U.S. dollar index, which tracks the greenback against a basket of its global peers, was marked 0.65% higher at 107.695.
Europe's Stoxx 600 was marked 0.43% lower in early Frankfurt trading, following on from a 1.65% decline for the Asia-region MSCI ex-Japan index and a 1.11% gain for the Nikkei 225 in Tokyo.
On Wall Street, futures tied to the S&P 500 are indicating a 22 point opening bell pullback while those liked to the Dow Jones Industrial Average are priced for a 130 point slide. Futures linked to the tech-focused Nasdaq are indicating a 90 point decline.
2. -- Week Ahead: Earnings, Inflation, Retail Sales In Focus
Corporate earnings could be the pivot point from which investors launch a sustained stock market rally between now and the end of the year, with investors closely eyeing the start of the second quarter reporting season later this week.
JPMorgan Chase (JPM), Citigroup (C), Wells Fargo (WFC) and Morgan Stanley (MS) will lead the way with June quarter profit updates, following on from their solid Fed stress test results last month, as around 18 S&P 500 companies are slated to update this week.
Collective S&P 500 profits are forecast to rise by 5.7% from last year to a share-weighted $465.3 billion, although the bulk of those gains will be derived from soaring energy sector profits. Once those are backed out, S&P 500 earnings will likely be 3% lower from last year.
June data on inflation and retail sales is also set for release this week, with the former expected to show another jump in the headline rate, to an eye-watering 8.8%, before the year-on-year measurements begin to subside over the final months of the year.
3. -- Twitter Shares Slump As Board Lawyers Up, Musk Walks Away
Twitter (TWTR) shares extended declines in pre-market trading following Tesla (TSLA) CEO Elon Musk's declaration that he's 'terminating' his $44 billion merger agreement and the social media group's vow to make him go through with the deal.
Twitter's board, after hiring the Delaware corporate law specialists Wachtell, Lipton, Rosen & Katz LLP over the weekend, is reportedly ready to file suit against Musk after the billionaire moved to back out of his takeover deal late Friday amid accusations that the micro-blogging website is hiding data related to the number of fake and spam accounts on its platform.
"The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk," Twitter chairman Bret Taylor said late Friday.
Musk, who waived his right to due diligence on the deal when it was unveiled earlier this spring, has consistently said that Twitter is refusing to co-operate by not sharing its calculations of fake accounts, while Twitter said it stood by its earlier filings with the Securities and Exchange Commission, which suggest less than 5% of total accounts are spam or fake.
Twitter shares were marked 6.7% lower in pre-market trading to indicate an opening bell price of $34.35 each. Tesla shares were marked 0.1% lower at $751.75 each.
4. -- Nio Shares Slide As EV Maker Responds To Grizzly Reports Allegations
Nio Inc. (NIO) shares slumped lower in pre-market trading after the China-based EV maker, and Tesla rival, responded to allegations made by short sellers Grizzly Reports.
Nio said the report, which alleged accounting irregularities focused on excessive battery sales to Wuhan Weineng Battery Asset Co.., a joint venture involving Nio, in order to inflate its revenue and net income.
Nio said it would form an independent committee to review the allegations and update investors "in due course".
Nio "reiterates its continued and unwavering commitment to maintaining high standards of corporate governance and internal control, as well as transparent and timely disclosure in compliance with applicable rules and regulations."
Nio's U.S.-listed shares were marked 3.8% lower in pre-market trading to indicate an opening bell price of $21.77 each.
5. -- Uber Responds to ICIJ Report on Kalanick Lobbying Era
Uber Technologies (UBER) shares moved lower in pre-market trading following a weekend report that revealed its aggressive lobbying strategies during its early years as a ride-sharing startup under former CEO Travis Kalanick
The report, spearheaded by the International Consortium of Investigative Journalists, alleged Uber built a powerful lobbying effort, used to influence lawmakers and key policy officials, a leveraged attacks on its riders to establish sympathy with politicians.
"We have not and will not make excuses for past behavior that is clearly not in line with our present values," Uber said in a statement responding to the ICIJ report. "Instead, we ask the public to judge us by what we've done over the last five years and what we will do in the years to come."
Uber shares were marked 2.15% lower in pre-market trading to indicate an opening bell price of $21.86 each.
